"The agreement is based on the understanding of both parties about the potential demand of China's flourishing executive aviation market, and their wish to extend their decade-long strategic partnership," says Embraer.

The deal was signed during Chinese premier Wen Jiabao's state visit to Brazil, and AVIC says this is a "win-win strategic international cooperation" programme.

"As the leader of China's aviation industry, AVIC will seize the opportunity to develop a platform building executive jets that will meet the demand of the global and China markets, and ultimately assist China's executive aviation industry progressing into a new stage," says Tan Ruisong, president of AVIC.

The first Embraer business jet to be produced in China will leave the facility at the end of 2013, says the company.

China's ICBC Financial Leasing has also signed a deal with the joint venture to take up to 10 Legacy 650 business aircraft.

The agreement, which consists of five firm order and five options, makes the lessor the launch customer of the China-built Legacy 650s.

Embraer's China-based representative was unable to provide further details on the plans.

The company had been in negotiations with Beijing since 2010 on the future of the Harbin line. Its earlier offer to convert it into a E190 regional aircraft production facility was rejected as that would have pitted the aircraft against China's indigenous Comac ARJ-21 regional jet programme.

China, however, is keen to manufacture a family of business jets in the country and the deal for the Legacy 650s fits that plan.

Embraer has received 154 firm orders for aircraft from China and has delivered 116. It says that it accounts for about 78% of China's regional aviation market.

It is also increasing its presence in the business aviation market and received 18 firm orders in this segment in 2011.

"The cooperation with AVIC on the Legacy 600/650 programme further consolidates Embraer's presence in China's executive aviation market," it adds.

The company, however, will face stiff competition in the Chinese market.

In March, American aircraft manufacturer Cessna signed an agreement with AVIC to develop and produce medium- and large-cabin business jets in China. Two months later, the pair formed a joint venture to perform final assembly, sales and customer support in China for the Caravan single-engined turboprop.